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When scarcity is threatened

An executive from Shanda Interactive has been handed a sentence in a Chinese court for creating virtual assets out of thin air and selling them through accomplices to players. This is according to PlayNoEvil’s report of a story in China Daily yesterday. The copying took place in The Legend of MIR II, a popular Korean MMORPG operated in China by Shanda.

The story helps to highlight how the value of virtual assets is often based on their artificial scarcity. Many virtual assets are positional goods, meaning that their value is derived not from their absolute attributes, but from the relative advantages they confer compared to other goods of similar kind.

The relative advantage is obviously reduced if a powerful asset is duplicated in quantity. This applies to MMORPG swords just as well as to virtual skirts. Second Life users took to the streets when a CopyBot made it possible to duplicate SL objects.

However, not all virtual assets are artificially scarce. While virtual “land” can be easily duplicated, good neighbourhoods can’t be. There are also limits to the amounts of unique and interesting names and numbers.

Examining the case, it seems that the man wasn’t prosecuted for what he did, duplicating computer code in a fantasy computer game isn’t after all illegal.

More, it is the issue that he was in a corporate position of responsiblity and, in that position, he abused that powers of that position to embezzle profits which could have been (should have been?) the company’s profits.

In the real world this would be similar to a music download employee selling for cash the codes to download music to people. The music itself is not effected, the company iself hasn’t suffered, however it has lost potential revenue and the individual has abused his power & responsibilities.

Considering the cash incentives which potentially an employee in a position of sufficent power could gain from misuse of power, it would be interesting to see the checks and balances which a larger company, for example, Blizzard, has placed on employee behavior.

Does this mean that games company’s should be keeping a very close eye on their employees to make sure they haven’t got their hands in the till? How close does that eye need to be? What sort of ethical responsibility do these companies have to both their customers and their own shareholders to prevent this kind of fruad and/or misuse?

All very interesting issues highlighted by this piece, and certainly something which I’m sure large games company’s will have to wrestle with again and again as the cash incentives on offer to employees potentially become larger and larger.